Coronavirus lockdown: Airline travel agents face severe cash crunch

The airline ticketing industry is facing the brunt of COVID-19 that has crippled the airline industry. Despite a direction from the ministry of civil aviation to pay cash refunds for cancelled tickets, which are booked from March 25 for travel up to May 17, the low-cost airlines are giving refunds only in the “virtual wallets” to travel agents, online travel aggregators (OTAs), and credit shells to passengers for future travel.

The move has pushed OTAs and travel agents into deep trouble. Many OTAs and travel agents are facing severe cash crunch as they are forced to pay the refund amount for cancelled tickets to passengers from their pockets.

“Ever since the aviation ministry issued circular directing domestic and international airlines to refund the booking amount for cancelled tickets, airlines are depositing the money into the digital wallets maintained by us with the airlines. But we cannot withdraw this money and are paying from our pockets to passengers,” Nishant Pitti, Co-founder of EaseMyTrip told DH.

He said an estimated Rs 180 crore worth of airline bookings had happened after the lockdown started on March 25. The amount runs into several thousand crores for international and domestic travel by all the airlines together if counted for tickets issued before March 25 which were cancelled because of lockdown.

EaseMyTrip, the third largest travel company in India, is the only company refunding cash to customers even when airlines are paying only in their virtual wallets. Whereas, other OTAs such as MakeMyTrip and Yatra have further created wallets for their customers and crediting the refund amount for future use.

Both these OTAs did not respond to phone calls.

“EaseMyTrip.com is refunding money to customers who have booked tickets post March 25 and travel till May 3, if airlines have given us credit in our virtual wallet. We have enough liquidity to take care of refunds,” Pitti said.

Till now, EaseMyTrip has refunded about Rs 50 crore to passengers, while Rs 75 crore is lying in the virtual wallets with various airlines, he said. EaseMyTrip sold Rs 4,200 crore worth of airline tickets during the fiscal ended March 2020.

SpiceJet and Air Asia India confirmed that they have started refunding the amount to customers as credit shells and the same could be adjusted for future travel up to March 2021. “Change to any new travel date before October 31, 2020 on the same route without any additional cost subject to seat availability. Changes can be done through AVA on our website,” AirAsia India spokespersons told DH. It has also extended the full credit account to two years.

The ministry had ordered for refund of tickets booked from March 25 to April 14 within 3 weeks from the date of cancellation request. “Earlier, airlines were giving refunds in the form of credit shells to customers. Now, we are paying from our pockets to passengers and low-cost airlines are not paying us the refund amount in our bank accounts, thereby impacting our cash flow,” said Jyoti Mayal, President, Travel Agents Association of India (TAAI).

The TAAI has approached the government through the minister of commerce and industry Piyush Goyal to issue a direction to the airlines to pay the refund amount to travel agents directly.

Jyoti said an estimated Rs 50,000 crore worth of airline bookings take place in the country annually. Of this, about Rs 27,000 crore worth transactions are done between March and July. So far, an estimated Rs 10,000 crore worth of cancellations have taken place and the amount is lying with various airlines including international carriers, she said.

The TAAI, which has a membership of 2,700 travel agents, has sought government’s immediate intervention to safeguard the interests of travel agents and the airline industry.